Citigroup Is Still Obviously Undervalued [View article]
I would note that the big discount in TCE is due to the extremely large DTA. T1B1 is ~$41/sh and probably a better indicator of near-term value. Once the DTA starts boosting capital ratios, the pps will migrate to its TCE/sh. I'd also note that we probably won't see a release from the Holdings LLR until Q3 (based on the comments in the Q&A). That said, it's clear that without those releases, Citi has a govern on the true earnings power.
AIG Stock Is On Sale For 50% Discount To Book Value [View article]
The only way AIG improves over time is if they can continue to buy back the US Treasury's position at these lower prices. First, it appears the core insurance ops run rate is something around $7.5B/yr. Int Exp is running about $2B (ex-aircraft)....corp exp is maybe $800MM/yr. So, pre-tax inc is <$5B/yr -- against a current market cap of $52.6B. Consequently, the excess proceeds coming for ML III, the IPO, and AIA need to soak up a lot of shares and shrinking the BV to match its earnings potential.
American International Group: Secondary Coming, Wait To Buy [View article]
The only way AIG improves over time is if they can continue to buy back the US Treasury's position at these prices. First, it appears the core insurance ops run rate is something around $7.5B/yr. Int Exp is running about $2B (ex-aircraft)....corp exp is maybe $800MM/yr. So, pre-tax inc is <$5B/yr -- against a current market cap of $52.6B. Consequently, the excess proceeds coming for ML III, the IPO, and AIA need to soak up a lot of shares and shrinking the BV to match its earnings potential.
American International Group: Secondary Coming, Wait To Buy [View article]
Kudos for getting the size right. I thought there was a good chance to go bigger. This drops the Treasury ownership down to ~55.9% so there's a chance they do another one around this size to get to 50.9%. Then, maybe a big one after AIA and the aircraft leasing IPO. ;^)
American International Group: Secondary Coming, Wait To Buy [View article]
AIG bought $3B worth on the first installment and then only $2B on the second. They didn't have the cash at the time to get more aggressive. IMO, the issue is more about how much the market can soak up at one time. It absorbed $3B in the first sale and $4B in the second (incl's over-allotment). Therefore, we know the market has been tested at $4B and, with AIG receiving $6B from MLIII, it's understandable why the Treasury could/would release $10B worth of shares. Since previous sales were at decent discounts, it gives the Treasury a reason to up the amount. In the end, the recent sales have been $6B vs. $5B...$10B isn't a stretch given AIG's cash balances.
American International Group: Secondary Coming, Wait To Buy [View article]
We shall see. However, there is a Catch-22 in your comment. If they are in the stock the price will stay down, if they get out the price will go up. They can't have it both ways. Also, the breakeven is down to ~$27.50 (my est.). So, the importance of getting out as fast as possible is the top priority so long as they stay above breakeven. They can also point to the $8B+ they've made on the JPM/AIG kicker.
American International Group: Secondary Coming, Wait To Buy [View article]
AIG received more than $6B from ML III sales. It seems like the next installment sale from the Treasury will be ~$10B. With the sale of AIA shares coming in September, I suspect they'll do another $10B installment after that event. There's a good chance the gov't will be out by year-end.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
And, if you've been following the Maiden Lane transactions (i.e. ML I was from BSC and ML II & III were from AIG), you'll also noticed that the once all these long-term assets were backed by longer term funding vs. short-term (10 yrs for ML I and 6 years for ML II/III), that most of the bank run/panics ended. Further, it was clear that the shorts were helping create the stress by manipulating the CDS index that caused AIG to keep posting higher and higher collateral requirements -- even against a portfolio of high-grade corp paper.
So, don't forget to mention that the NY Fed not only earned an appropriate int rate on those funds but will also make upwards of $8 billion from the liquidation of those funds. Here's a link to help you get up to speed: http://bit.ly/NZpmUW
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
That's interesting...if not a revisionist history. The healthy banks were asked to participate in TARP in order to calm down the markets. In order to achieve that goal, all the banks were required to participate so it did not suggest there were weakened banks. If you look at the parts that comprised "TARP", you'll see the portion set up for the healthy banks. It should also be noted that they returned the money as soon as they were allowed given the fact the politicians were turning the program into a "the fat cats got theirs" so where's the money for the "avg joe." It should also be noted that the Dems on the hill at the time ordered a hearing where the bank CEOs appeared on the Wednesday which was 2 days before the vote on the completely wasteful stim-u-less plan was voted on and approved. Instead of showing your ignorance, just go back and look at which banks absorbed the bad players...where did BSC, CFC, MER, WaMu, and Wachovia go? Sadly, you probably don't even know that the FDIC is funded via bank assessments and fees. Consequently, this means that the TBTF banks are the primary sources for cleaning up all the smaller insolvent banks.
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
Steve J's comments are a light in the darkness of so much (financial) ignorance. Unfortunately, those who are concerned have been fed so much inaccurate information by unknowledgable people that they don't know what's up or what's down anymore. The politicians needed to blame someone for their role in forcing a social (housing) program into the private capital markets. Although there were bad players in the mortgage market (i.e. CFC, WaMu, Wachovia, BSC, LEH, MER), they were absorbed by the good players -- and their private capital. I don't blame the unknowing because even the head of the SEC division of regulation didn't know what he was talking about: http://bit.ly/LPo7LY
Yes, I still think DYN's common stock is terminal. The fundamentals of its core operating cash flows have not changed. The natural gas curve is still at prices less than what DYN projected. IMO, the bond prices reflect the activity of those who are interested in getting a lower entry point for buying the remaining assets when the time comes.
A Realistic National Energy Policy and What It Means for Investors [View article]
Valid point and is eluded to in "Step 2"...however, it's helpful to point out that there are U.S. exports to those oil countries which offsets some of the trade imbalance -- i.e. it's not all one-sided in that regard. I don't have the breakdown but its something that needs to be added in the overall conversation.
IMO, Chinese imports are more "dangerous" for our trade deficit.
But, I agree that sourcing domestic fuels have a multiple benefits AND may even allow some energy-intensive industries that have been "off-shoring" to come back to the U.S. if energy costs were more reasonable & stable.
Has the price not fallen over that period of time? There were a lot of long-term holders that rode the shares down from over $52.50 to the $5 and change it is now that wish they had weighed my comments more carefully.
I think you make a good point. I don't see why the banks would just grant a waiver for a future breach of a covenant. In order to get a meanfuling extenstion to its credit facility, the company is going to have to come up with a credible plan on how it will survive.
Citigroup Is Still Obviously Undervalued [View article]
AIG Stock Is On Sale For 50% Discount To Book Value [View article]
American International Group: Secondary Coming, Wait To Buy [View article]
American International Group: Secondary Coming, Wait To Buy [View article]
American International Group: Secondary Coming, Wait To Buy [View article]
American International Group: Secondary Coming, Wait To Buy [View article]
American International Group: Secondary Coming, Wait To Buy [View article]
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
So, don't forget to mention that the NY Fed not only earned an appropriate int rate on those funds but will also make upwards of $8 billion from the liquidation of those funds. Here's a link to help you get up to speed: http://bit.ly/NZpmUW
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
Big Banks' $76 Billion Per Year Federal Subsidy And What We Need To Do About It [View article]
The Final Stage of Dynegy [View article]
A Realistic National Energy Policy and What It Means for Investors [View article]
IMO, Chinese imports are more "dangerous" for our trade deficit.
But, I agree that sourcing domestic fuels have a multiple benefits AND may even allow some energy-intensive industries that have been "off-shoring" to come back to the U.S. if energy costs were more reasonable & stable.
The Final Stage of Dynegy [View article]
The Final Stage of Dynegy [View article]
The Final Stage of Dynegy [View article]